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Revenue recog as9
Accountancy
Goods price is 1000 Trade disc 40 After trade discount 960 Got cash disc 30 Paid 930 Why we say revenue is 960……even thou paid 930 ?
Answers (5)
Best Answer
Trade discounts are not recorded in accounts seperately.Rather the trade discount is deducted and the net value is recorded in the books to make it simpler.Therefore we say 960Rs as revenue received since it is the net value we recorded it in books.Whereas cash discounts are given to encourage prompt payment.Therefore it is an expense to the company and hence disclosed seperately.Therefore cash discount of RS 30 is not reduced from 960 directly but shown as 30Rs seperately as expense in P and L.The net impact in P and l will however amount to 930 Rs.
